Hilton splashes into the Caribbean with all-inclusive resort deal

New York

ALL-INCLUSIVE resorts, which typically charge budget-conscious travellers a single price for lodging, food and often airfare, have long been the domain of speciality operators. Now the world's second-largest hotel company is wading further into the business.

Hilton Worldwide Holdings Inc on Monday announced an alliance with Playa Hotels & Resorts NV, a real estate investment trust that specialises in all-inclusive resorts. Playa will convert two Caribbean hotels into Hiltons, and the companies plan to team up on an additional eight resorts by 2025, according to a statement. Hilton currently has 11 such properties in its portfolio.

"Our existing customers, and the customers we're trying to attract, want more resorts," said Hilton chief executive officer Christopher Nassetta in an interview from Playa del Carmen, Mexico. That is especially true of loyalty-programme members "who beat their bodies up travelling on business and want to dream about going to beautiful resorts to relax and rejuvenate," he added.

All-inclusive resorts became popular in the 1950s as a way to appeal to bargain-hunting vacationers, according to a report last year from Jones Lang LaSalle. In recent years, hotel owners have been applying the model to higher-end properties, sparking "growing curiosity and interest of global management companies," according to the report.

The niche is still dominated by brands like Sandals Resorts International and Secrets Resorts & Spas.

Hyatt Hotels Corp operates six hotels under two all-inclusive brands, but those are more the exception than the rule.

Playa, led by CEO Bruce Wardinski, has been seeking to partner with big hotel companies to reduce commissions it pays to tour operators and online-travel agencies and gain access to millions of loyalty members who pay for their vacations with points earned on business travel.

The two hotels that Playa is converting to Hiltons are in Playa del Carmen and La Romana, Dominican Republic. Playa plans to spend as much as US$54 million upgrading the two properties, according to a filing on Monday. In February, Playa acquired the Hilton Rose Hall Resort & Spa, in Montego Bay, Jamaica.

"We can access a more sophisticated and higher-paying guest than has typically gone to all-inclusive resorts," Mr Wardinski said. "Now they see the Hilton flag, and they're going, oh, I'm going to try that." BLOOMBERG